The dollar could bring investors a nasty surprise

, your problem. That is how John Connally, America’s Treasury secretary, described the dollar to European leaders in 1971. The phrasing was apt. His boss, Richard Nixon, had suspended the convertibility of the dollar into gold and demanded a change to the exchange-rate system established at Bretton Woods in 1944. Other countries were told to strengthen their currencies, or America would subject them to trade restrictions. Compliance followed in short order. By the end of the year, the Smithsonian Agreement had devalued the dollar by around a tenth against key foreign currencies. Today’s exchange rates are mostly floating, set by the market rather than at crunch talks. Yet once again a weaker dollar is prompting sighs of relief. Last September the , a gauge of the dollar’s strength against other currencies, was at its highest in 20 years (see chart). The yen had tumbled; the pound at one point looked like it was racing towards parity with the dollar; the euro spent a few brief spells below it. Since then, the greenback has weakened: measured by the , it is now 10% below its recent peak.